Classical music and hymns are replacing rock and pop on BBC Radio Cymru as the deadline for a rights deal with leading Welsh-language musicians passes.

The right to broadcast the songs of 331 Welsh-language musicians and music publishers rests with Eos - the Welsh word for nightingale - from today.

The BBC said Eos had rejected a substantial offer to settle the dispute shortly before Christmas. As no agreement was reached, Radio Cymru has implemented changes to its broadcasting hours and programme content.

BBC Cymru Wales said in a statement on Monday it was "very disappointed" an agreement had not been reached and confirmed Radio Cymru programmes would be affected.

"Radio Cymru's commitment to support and develop Welsh music is a longstanding one - and we have listened carefully to the concerns of Welsh-language composers and artists during this dispute," the statement said.

Once again, the desire to make a cash grab has overwhelmed the desire to be heard. And it always seems to be "representatives" of the artists that keep cutting ahead in line to get their hands out first, often at the expense of the very artists they "serve."

Unsurprisingly, the pernicious acts of another performance rights group is behind Eos' search for a "fair price." Having been screwed by an old Techdirt favorite, Eos is now attempting to force the BBC make up for PRS' actions.

The musicians broke away from the Performing Rights Society (PRS) to join a new agency, claiming they were being short-changed for their work. The dispute arose from a change by the PRS in 2007 which many Welsh language artists claim cut their royalty payments by as much as 85%.

Rather than attempt to get PRS to pay this "fair share," Eos has decided to go after the broadcasters who had nothing to do with the severe slashing of royalty payments, which fell from £1.6m in 2007 to £260,000 in 2009. Eos is acting on the recommendation of research paper published in 2009 that presented a way to generate (or at least ask for) nearly 10 times the going rate per minute of broadcast time.

The report says artists who broadcast on BBC Radio Cymru receive 49p for every minute of airtime, collected by PRS. However, it says Radio Cymru is treated like an English local radio station, rather than a national broadcaster

The report argues that if the station was available on the UK DAB network of digital stations, artists would earn £4.71 per minute, nearly ten times as much. It said a Welsh-based royalties agency would be aiming to bring back in something more like the larger DAB royalties fees.

"Welsh language repertoire - Radio Cymru relies on that for its broadcasting," pointed out the report's joint author, Deian ap Rhisiart. "If the whole composers and publishers en block declare they are terminating their membership with the PRS, then the BBC haven't got any choice but to deal with them - that's the scenario."

At that point, a spokesman for BBC Wales (quite logically) claimed that this was a dispute between PRS and its Welsh members, and that these two entities should attempt to solve it on their own. Unfortunately, Welsh artists decided it would be better to set up their own organization and tangle with the BBC directly. The end result? An outcome that overreaching rights organizations all over the world are familiar with: no additional income and the loss of an outlet.

So, in a quest for "more," Welsh artists have ended up with less (at least temporarily) exposure and the very real potential of finding themselves vilified by the same listeners who used to consider themselves fans. Rather than go after PRS for screwing Welsh artists, Eos decided to pass the screwing along to Radio Cymru, pricing itself out of the market and depriving itself of a useful promotional tool.

from the of-course dept

For years, we've been covering a key legal fight in the music business, involving Eminem's producers, FBT, and Universal Music, over how much was owed on iTunes sales. The key issue: is an iTunes purchase a "sale" or a "license." Older music contracts that predated the internet era tended to focus on sales, in which artists tend to get about 15% royalties. "Licenses," on the other hand, tended to be for things like commercials or movies, but commanded around 50% royalties. But when you talk about iTunes songs, you can make somewhat compelling cases that it's either a sale or a license, depending on which details you focus on. Universal Music, of course, insisted that it was just like a CD sale. FBT argued it was just like a license. There are a ton of other similar lawsuits ongoing, but after losing at the district court level, FBT won on appeal. That resulted in a somewhat insane and contentious fight over how much Universal would have to pay up, with a judge slamming Universal for hiding revenue with tricky funny money accounting, and even trying to expense the cost of this very lawsuit back against what they owed.

However, the damages phase of the case was set to go to trial in the spring, and it would have (1) revealed an awful lot about the blackbox of Universal Music's accounting practices and (2) given a roadmap for the many other similar lawsuits against Universal Music (and the other major labels). Given that, it should come as no surprise that Universal Music scrambled to come up with a way to get FBT to settle... with the terms of the settlement being secret. This almost certainly means that UMG paid through the nose, with the hope that it makes it more difficult for other artists to get similar rewards, and while allowing Universal to keep its secrets secret... for now.

from the again? dept

You may recall that nearly a decade ago, people began to question why SoundExchange, the RIAA spinoff created to collect satellite and internet broadcasting royalties, was allowed to keep any of the money for artists it couldn't find. That resulted in some controversy, when people realized that it was sitting on over $100 million and suggesting it might keep the money for a big list of artists it couldn't find. After much uproar, SoundExchange backed down, and said that it wasn't, in fact, keeping the money. And, to its credit, in the past few years, SoundExchange has been very good about working a variety of angles to get artists signed up to get the money they're owed from such webcasting royalties (such as those Pandora was just talking about).

However, some artists still aren't signing up -- and SoundExchange is apparently giving people something of an ultimatum, in which they hint at the fact that, you know, if they wanted to they absolutely couldjust keep the money.

Register by Oct. 15 as you may risk losing any royalties collected three (3) or more years ago by SoundExchange.

SoundExchange is authorized by law to release older unclaimed royalties to offset our costs and distribute proportionally to those we already pay. We have repeatedly held off on doing this, but we need your help to spread the word and get recording artists and record labels to register.

As some have noticed there are some pretty big names on the "unclaimed" list. Swedish House Mafia, N.W.A., Billy Bob Thornton, Sublime, Fleetwood Mac, Rebecca Black, Louis CK, Grandmaster Flash, The Byrds, Charlie Sheen, Brother Ali... and a bunch of others. I'm pretty surprised that Rebecca Black and Louis CK haven't figured this out yet... but there's one name on the list that is stunning: Gene Simmons. Simmons is famous for being focused almost entirely on getting money, even to the point of saying that artists should sue their fans. You'd think that somewhere along the line he'd notice that he should register with SoundExchange to get what's owed to him.

For what it's worth -- while there were some legitimate concerns that SoundExchange was doing little to "find" these artists, I no longer believe that's the case. Having watched their efforts over the past few years, they really have done quite a lot to try to get artists to register. Of course, this really just highlights one of the problems of setting up a system like SoundExchange in the first place. Creating unnecessary middlemen may seem like a useful solution, but it often seems to just prevent more direct support of artists. Still, if you are a recording artist of any kind, it's worth getting registered to avoid having SoundExchange keep the money it has for you for itself.

from the a-step-in-the-right-direction dept

We were just talking about how incredibly broken the system is for establishing webcasting rates, in part because the law itself explicitly says that the Copyright Royalty Board (CRB) Judges should look to prevent disruptive innovation and preserve "prevailing industry practices." In practice this has meant that basic webcasting rates, established by CRB judges, are usually somewhat insane and impossibly out of touch with reality. It's only gotten worse over time -- and the last round ended up being so crazy that everyone basically agreed to ignore those rates and set their own. And while those rates were lower than what the judges wanted to set, they're still ridiculously high, significantly limiting the amount of webcasting available today. Even the leaders in the field, like Pandora, admit that with current rates, it's basically impossible for the company to ever make a profit.

Of course, some have looked at the discrepancy in royalty rates between webcasting and other offerings, like satellite and cable radio, and thought that the best way to deal with this is to massively increase royalties on those other services, effectively creating the RIAA bailout bill of 2012. Senator Wyden, thankfully, has other ideas. Today's he's introduced a bill in the Senate, the Internet Radio Fairness Act (IRFA), which tries to fix a bunch of issues with royalty rate setting. Like a bill introduced by Rep. Chaffetz in the House, Wyden's bill would shift internet radio rates to the same process as satellite and cable, rather than the other way around. Those royalties, while still high, are much less onerous.

It also seeks to fix other issues, including the ridiculous rule saying that internet radio broadcasters aren't allowed to make backups of the music they legally purchased. IRFA makes a slight change to the rule, allowing backups solely for the purpose of webcasting. The bill also looks to fix the somewhat awkward situation under which the CRB was recently found to be unconstitutional due to everyone ignoring the appointments clause (thus, in the future, CRB judges would have to be nominated by the President and confirmed by the Senate, rather than appointed by the Librarian of Congress). This process would at least somewhat increase the level of oversight for who gets on the CRB. More importantly, the bill would require CRB judges have a bare minimum level of experience related to this topic, rather than no experience at all, as often seems to be the case today.

There are two other very interesting aspects to the bill as well. Because, historically, the judges have more or less established rates by staring into space and picking what number "feels" right to them (only a very, very slight exaggeration), rather than what the market would really establish, the bill requires the judges to look at actual agreements in the marketplace, and tries to bring more transparency to those royalty rates. I would imagine this section is going to freak the labels out quite a bit, as they rely on secrecy to try to extract crazy high rates for other services.

Finally, the bill would also seek to establish a global music rights database, somewhat similar to proposals we've discussed before, when TopSpin's Ian Rogers suggested such a thing. There are related efforts underway elsewhere, and the goal here is to:

include all known or copyrighted musical works, the writers of the work, the owners of the rights, the entity on behalf of those owners who can licenses such rights on a territory-by-territory basis, and all known sound recording data.

I have concerns that how such a database is set up can lock in place certain terms or rules, potentially limiting some innovative uses, offerings and services, but it is an interesting idea worth discussing, and would move a highly opaque system that the labels have long abused to one that is much more transparent and open. For pretty much all of these reasons, I expect that the RIAA is going to come out vehemently against this bill, preferring, of course the one that bails them out.

Either way, Wyden's statement on the introduction of the bill is dead on:

“The Internet has shown itself to be an incredible tool for enabling innovation and competition to make existing industries better,” Wyden said. “However, there are those who seek to stifle that evolution by pushing through onerous and unfair laws to limit competition and protect the status quo. Fourteen years ago, when online radio was in its infancy, the incumbent interests were successful at getting laws passed to discriminate against the Internet. This bill puts Internet Radio on an even plane with its competitors, and allows the music marketplace to evolve and to expand--which will ultimately benefit artists and the internet economy.”

from the isn't-that-a-problem? dept

A few weeks back, we wrote about a proposal by Rep. Jerry Nadler, which we referred to as the RIAA Bailout Act of 2012 because it sought to change the nature of satellite radio royalties to put them on par with the absolutely ridiculous and unsustainable royalty levels for internet radio. In case you don't know, there are basically three very different tiers for the royalties that need to be paid to musicians (separate from songwriters) for broadcasting the tracks on which those musicians played. If it's played on the radio, the stations have to pay nothing to the musicians, as Congress long ago decided that radio play was the equivalent of advertising (a viewpoint that is pretty accurate, given the decades of payola that have shown that radio play is so valuable that labels will pay stations and djs to get their songs played). Then there are the satellite radio guys (basically Sirius XM at this point). They pay a rate that they already think is too high and pass those rates directly on to consumers. In preparation for a new rate-making process, they're already seeking out legal ways to get away from having to pay statutory rates.

But what the satellite guys have to pay completely pales in comparison to what internet streaming companies like Pandora have to pay. There, the rates are so crazy that it's become clear that Pandora has little likelihood of ever being profitable unless something drastically changes. Matt Schruers, over at Project DisCo, has an absolutely fascinating look back at why these rates are so bad, and it comes down to this simple, but positively scary point:

When the Copyright Act of 1976 was passed, it was so taken over by regulatory capture by a few key industries, that they explicitly put into the Copyright Act that it should be used to stop disruptive innovation from challenging legacy businesses. I've read the Copyright Act many times, but have to admit that I'd never quite noticed this line from 17 USC 801(b)(1)(D), which explicitly states that the role of the Copyright Royalty Judges on the Copyright Royalty Board that sets the rates for internet radio are there:

To minimize any disruptive impact on the structure of the industries involved and on generally prevailing industry practices.

Yeah. Their job is to set rates that basically kill off disruptive innovation in favor of "prevailing industry practices." As Schruers notes, this goes against absolutely everything we understand about the importance of disruptive innovation in driving forward the economy:

That’s right: employees of the U.S. Government who dictate price inputs for entire industries are statutorily charged to resist change. While the CRT / CARP / CRB has always had other statutory guidance as well, for example, maximizing availability of works, affording copyright owners a “fair return” and users a “fair income under existing economic conditions”, Congress enshrined this explicit rule that no one be permitted to upset the existing players’ apple cart. There is no pretext here, no cynical appeal to some higher objective that justifies minimizing disruption of the prevailing industry — change is inherently bad. The statute gives no consideration of whether a better business model might come along, and in fact affirmatively discourages any — not only because the statute aims to minimize any “disruptive impact”, but also because this license was limited solely to “pre-existing” services by the Digital Millennium Copyright Act in 1998. New arrivals were out of luck.

How the hell did something so explicitly corrupt and so clearly a form of crony capitalism get directly into the Copyright Act? Take a wild guess:

So how did this “minimize disruption” language wind up in the Copyright Act of 1976, given that it so clearly violated the First Rule of Defending the Status Quo? The “minimize disruption” requirement is a vestige of a copyright legislative process that stretched over many years, starting in the 1960s, at a time when fewer people appreciated copyright and fewer still understood the contours of the legal system that created those rights. Much of the initial drafting of the ‘76 Act was by the Copyright Office, which chaired a series of meetings with prominent industry copyright lawyers throughout the 1960s.

Counsel for publishers, the recording industry, broadcasters, were well represented in these discussions. The future, as the saying goes, had no lobbyist. It is not surprising, therefore, that the multi-factor test that determines the rates paid by services like satellite radio under the Copyright Act’s statutory licenses would reflect the perspectives of the existing parties to the arrangement. The standard from the ‘76 Act remains today (although at the time, the statute was focused on regulating “coin-operated phonorecord players”.)

And... believe it or not, that's not even the end of the story! That part of the Copyright Act is the part that impacts the satellite guys. But the streaming internet folks? For them it's even worse, as the statute takes things even further to create even more incentives to further kill off these new innovations -- by basically saying that a "proper" license is one with which a "willing seller" is happy. In other words, it sets the statutory rates almost entirely based on the interests of... the existing, entrenched players.

And that's why Pandora may never be profitable if nothing changes. Because we've actually built into copyright law that disruptive innovation is bad and should be minimized at the interests of the legacy players.

from the riaa-bailout dept

Ah, the whole fight over licensing and royalty rates for internet radio had been quiet for a little while, but has sprung back up thanks to Rep. Jerry Nadler proposing a music royalty bill that would effectively bump up the rates that cable and satellite radio stations have to pay to make them more aligned with the insanely high rates that internet streamers are supposed to pay (rates so high, and set by a group of judges who don't appear to know what the internet is half the time, that no real business can be built off of them). This is in contrast to a different, but similar, attempt by Rep. Jason Chaffetz to basically bring the internet rates back down to the same rates as those other providers.

Of course, this is all somewhat related to the RIAA's ongoing push for a Performance Rights Act, which would force radio stations to pay extra royalties for when they play music. Under existing law, radio stations only pay the composers/songwriters for songs played on the air, due to the recognition that radio airplay is basically a massive advertisement for the musicians and it's silly to have stations pay the copyright holders for advertising their works. In fact, it's doubly crazy when you realize that the history of radio is filled with pretty indisputable evidence that the major music labels find tremendous value in radio play: payola. Payola is all about the labels increasing the airplay, knowing that it leads to all sorts of revenue elsewhere. But the RIAA is so insanely greedy these days that it's been begging for this form of a "bailout" for quite some time -- seeking to get radio stations to pay them for playing the same music that the labels are paying the stations (indirectly, of course, thanks to all the payola settlements) to play!

These proposals don't directly address that issue, but are clearly based on this idea. In fact, Nadler is incredibly upfront that he views taxing internet radio is his way of making up the money that isn't being collected from terrestrial radio:

“The lack of a performance royalty for terrestrial radio airplay is a significant inequity and grossly unfair. We can’t start a race to the bottom when it comes to royalty rates and compensation for artists," Nadler said in a statement. "The Interim FIRST Act would provide artists with fair compensation for the valuable creations they share with all of us."

In other words, because we can't fund an RIAA bailout off the backs of terrestrial radios (thanks in part to the powerful lobbying of the NAB), we'll instead increase the existing (and already crippling) tax on the useful and innovative services that are trying to help drag the RIAA (kicking and screaming) into the future.

Pandora is, quite reasonably, worried about this turn of events, noting that this new tax would be "astonishingly unfair."

Nadler seems to think that Chaffetz's plan is unfair because it would mean lower royalties from the internet streamers, but that's a gross distortion for a few reasons. First off, it assumes a perfectly static market, which is wrong. Second, it seems to assume that the identical number of services and the identical number of listens will occur. That's not true. As it stands now, the rates are so damaging that Pandora -- the top player in the space -- has made it clear it may never be profitable. Yes, never. Nadler's bill would effectively make sure that no one else in that market would be profitable either. The end result? Many of these services don't exist or never get started. That would actually mean fewer services, fewer listeners and lower royalties.

It's almost as if he has no concept of price elasticity. Lower prices can create higher total income. Also, the idea that any particular Congressional Rep. should be (effectively) determining what the "fair" price is for anything is, well, horrifying.

If these royalties are going to exist, is it really so crazy to think that perhaps (just perhaps) keeping the rates low, to encourage these useful new services to come along and grow, might be a good thing? But, instead, the RIAA and its members are so greedy for the largest payout per music listen, that they're clearly willing to kill off useful legal streaming services like Pandora. In the long run, that's not good (at all) for the record labels and the RIAA, but they've never been particularly good at seeing beyond the price per listen.

Either way, can anyone explain just why the government is bailing out the RIAA in the first place?

from the not-just-artists-getting-screwed dept

For years, we have highlighted the great lengths that major labels go through to avoid paying out royalties to artists. These actions culminated in a number of artists suing the label in an attempt to actually be paid the royalties owed to them on music sales. Sony hasn't been immune to these lawsuits either. In fact, it has just recently settled a lawsuit over iTunes sales. With all these attempts to avoid paying artists and then being forced to by the courts, is it really a surprise to learn that artists aren't the only ones getting screwed by these labels?

While most of our stories revolve around the artists who get screwed, there are other people getting screwed in the process as well. One of these people is a music producer by the name of Roy Thomas Baker, a producer for the likes of Queen, Guns N' Roses and Journey. Roy is now suing Sony for unpaid royalties on 21 Journey songs.

Sony was supposed to pay Baker royalties under a producer agreement, according to his 18-page federal lawsuit. But Baker says an audit of Sony's books revealed that the music company had been underreporting his royalties by more than $475,000 for the period audited.

He says Sony is refusing to release other documents that might uncover additional underreporting since the audit, and he estimates that his royalties may have been underreported by more than $500,000 before the audit using Sony's incorrect rates.

If these allegations against Sony are true, that is quite a lot of money that Sony was not paying out. It really isn't surprising at all though. We have seen such payment dodging from all throughout the legacy entertainment industries. Publishers, labels, movie studios and game publishers have all used such tricks to avoid paying out money to the people who actually make possible the income they have. All the while claiming that they support the people in the trenches.

This lawsuit also highlights something we pointed out about that settlement Sony made earlier in the year, that Sony got off way too easily.

Baker says he opted out of a class action over Sony's alleged failure to correctly pay artists for downloaded music because the proposed settlement in March "is wholly insufficient to make plaintiff whole."

Because no matter how you worked out the split of the $5 million that Sony set aside for settlement, Roy would not have made anything close to the $475,000 he says he is owed. If other artists and producers feel the same way, Sony's legal team won't get any rest any time soon.

All in all, these lawsuits are just another indication that the entertainment industry is changing. As more and more artists are able to bypass legacy gatekeepers and only use those enablers that truly add value to their work and make more money in the process, those artists stuck with legacy gatekeepers will wonder why they aren't making as much money as they feel they should. They will eventually leave those gatekeepers, but in the meantime, we will see a whole lot more actions like this as those artists and other enablers seek to get paid.

from the I-get-how-much? dept

Creative accounting from legacy players is nothing new. We have seen many repeated examples of ways in which legacy publishers, labels and producers try to limit the amount of money they pay out to the artists they depend on for their incomes. We have the fact that Return of the Jedi, despite being the 15th highest grossing film of all time, is still not profitable. There is also the crumple zone inducing idea from the major labels that digital sales are licenses except when they are not. So would it be a surprise that we would find a similar situation within the legacy publishing industry?

This lawsuit results from Defendant Harlequin Enterprises Limited, the world’s leading publisher of romance fiction, depriving Plaintiffs and the other authors in the class, of e-book royalties due to them under publishing agreements entered into between 1990 and 2004. Harlequin required the authors to enter into those agreements with a Swiss entity that it created for tax purposes, and that it dominates and controls. However, Harlequin, before and after the signing of these agreements, performed all the publishing functions related to the agreements, including exercising, selling, licensing, or sublicensing the e-book rights granted by the authors. Instead of paying the authors a royalty of 50% of its net receipts as required by the agreements, an intercompany license was created by Harlequin with its Swiss entity resulting in authors receiving 3% to 4% of the e-books' cover price as their 50% share instead of 50% of Harlequin Enterprises' receipts.

What this means to the authors can be illustrated by an e-book with a hypothetical cover price of $8.00. The “net receipts” made by Harlequin Enterprises Limited from the exercise, sale or license of e-book rights would be at least $4.00, of which authors would be entitled to $2.00 based on their 50% royalty. Computing the “net receipts” based on the “license” between Harlequin's Swiss entity and Harlequin Enterprises, Plaintiffs’ 50% royalty amounts to only 24 to 32 cents.

Basically, these authors are just not happy with these reduced royalty rates. The authors claim that Harlequin Switzerland was set up for no other purpose but to syphon out as much money as possible before calculating any royalties for the authors. Hardly something that any publisher should do if they actually care about their business.

There was once a time where such a tactic would not have reached the point of a lawsuit. There was a time when publishers actually had a strangle hold on publishing and could force any terms they could conceivably get away with. However, with the introduction and proliferation of self publishing, that stranglehold is weakening. As authors are looking at the deals they are getting from publishers vs the deals self published authors are getting from the likes of Amazon and even Apple, they are beginning to lash out.

Of course, if Harlequin were smart about this, meaning it realizes the mistake of using such accounting methods, it would seek a quick settlement that results in the authors getting paid their proper royalties. If for some reason, as many publishers claim, it cannot afford to pay authors the true 50% then it will see a quick decline of new authors and a drop off of existing authors. Then, it will fail.

from the but-that's-how-the-labels-work... dept

We've had plenty of discussions about shady RIAA accounting, and more and more of that is coming out in public following a series of lawsuits that concern both how the major labels account for digital sales (is it a sale or a license?), but also in how they calculate overall royalties. One of the most high profile of these cases involves Eminem's producers, FBT Productions, which was the first of these cases to rule that digital/iTunes sales were "licenses" and not sales (and thus required Universal Music to pay much higher royalty rates: 50% as opposed to ~15%). Of course, as the case has moved on to other stages, it's increasingly revealing some of the many, many shady practices that Universal Music has been using to try to hide revenue from Eminem -- including trying to expense the cost of this very lawsuit against his earnings.

The latest news is that a judge has completely slammed Universal's latest attempt to hide money from FBT, after it came out that Universal had inserted what appeared to be a minor definitional piece into a summary judgment action earlier in the case, which it's now using to claim that FBT should only get a cut of 29% of revenue, rather than 100% or revenue. The details are a bit technical, but as THResq explains:

Last autumn, Universal brought a motion for summary judgment on the phrase "our net receipts" in the agreement in question. In response, the judge ruled that "our" referred to Aftermath. So Universal says the judge's ruling means FBT has to live with what Aftermath gets (29 percent) instead of what Universal gets (100 percent).

However, Universal also has some sort of tricky accounting going on for foreign receipts, in which Aftermath only gets 29% -- so now it's arguing that it only has to pay out the 50% on that 29%, rather than on the full 100%. The judge reasonably went ballistic at this obvious attempt to trick the court and FBT, and to effectively sneak through the provision defining "our net receipts" earlier:

"Furthermore, the Court is deeply troubled by Defendants’ argument. While it is hard to see what FBT could gain by feigning ignorance, it is now quite apparent what Defendants could hope to gain by bamboozling the Court and Plaintiffs on this issue. Defendants’ current stance makes it appear as though Defendants carefully inserted the issue into the motion for summary judgment before they had notified FBT or the Court of what percentage of the revenues from foreign sales of permanent downloads and mastertones would be paid to FBT. An attempt to dupe the Court into a premature ruling will not serve as the basis to deny FBT an opportunity to challenge Defendants’ accounting practices."

This does not bode well for Universal in this case, however it is yet another example of the tricky math that the RIAA labels like to use in screwing over artists. It's good to see more and more of this coming out in public, though it's really quite amazing the lengths that these labels (mainly the majors) will go to in order to keep money from artists, using all sorts of suspicious accounting and legal tricks. The deceptiveness here is clearly planned out, and they seem almost proud of how clever they are in screwing over artists. It's stunning. In an era where more and more artists are realizing that having a label is now an option not a requirement, publicly trying to screw them over on royalties is not exactly a path to success.

from the broken-systems dept

If there is such a thing as a functioning copyright system, one of its tenets should be that it is quite easy to know if what you're doing is infringement. Of course, as we've discovered over and over again, people infringe unkowingly all the time -- and it's not just because of negligence or ignorance. Often it's because it's simply impossible to figure it out. Take, for example, the quite common practice of uploading a cover of a song to YouTube. This happens all the time. Lots of people record themselves singing popular songs and put them on YouTube. According to Andy Baio, about 12,000 such cover songs are uploaded each day. Justin Bieber became Justin Bieber because of some YouTube videos of him singing someone else's songs.

But is that breaking the law?

Andy Baio dug into that question and discovered that it's almost impossible to determine that. Now, if you're merely recording a cover song for release, there are compulsory/mechanical license fees you can use. This is why you see cover songs on albums all the time. They're not done with "permission," but rather because someone paid the compulsory rate set by the government. The problem, however, is when you add video to the mix. Once you're talking about a video with music, a second license has to be secured: the sync license. And there are no compulsory rates with sync licenses -- meaning that the copyright holder can (and often does) demand exorbitant fees if they even respond to your request at all.

Now, as Baio notes, Google did sign a deal with the National Music Publishers Association to allow publishers to join a program where they get some money in exchange for allowing their songs to be played by others on YouTube. But no one knows whose publishing rights are actually covered by that agreement, meaning that it's effectively useless.

The end result? It's likely that a rather large number of the cover song videos uploaded each day are infringing -- potentially opening up the uploaders to huge statutory fines for violating copyright law. This is a clear sign of where the law is broken. The law clearly wasn't mean for these kinds of situations, and it's easily fixable. Baio makes the point that here's an easy reform to copyright law that would decriminalize a very common behavior:

The real question: Why is it illegal in the first place?

Cover songs on YouTube are, almost universally, non-commercial in nature. They’re created by fans, mostly amateur musicians, with no negative impact on the market value of the original work. (If anything, it increases demand by acting as a free promotional vehicle for the track.)

The best solution is the hardest one: To reform copyright law to legalize the distribution of free, non-commercial cover songs.

Copyright law was intended to foster creativity by making it safe for creators to exclusively capitalize on their work for a limited period of time. Cover songs on YouTube don’t threaten that ability, and may actually prevent new works by chilling talent that could go on to do great things.

Seems like a simple enough thing to fix... which is why it's unlikely to actually happen.